UNIVERSITY OF ZAMBIA

DEPARTMENT OF ECONOMICS
ECN 2311 TAKEHOME TEST
2022
DUE: FRIDAY 3 JUNE TIME: 07:00 HRS
1. Verify the distributive law, given A= (4, 5), B= (3, 6, 7), and C = (2, 3).

i. Derive a function for marginal revenue if a monopoly faces the non-linear

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demand schedule 𝑃 = (4+𝑞)5

ii. Assume that the firm is operating in the short run, use the quotient rule to prove
that marginal cost schedule cuts a U-shaped average cost curve at its minimum
point.

2. Find the loss of consumer surplus when the price is forced to P = 46 in Unza market with
the following inverse demand and supply functions respectively;

P = 45 − Q

P = 3 + 0.5Q

3.
a. A Multi-plant monopoly operates two plants whose marginal cost schedules are

𝑀𝐶1 = 42.5 + 0.5𝑞1

𝑀𝐶2 = 130 + 2𝑞2

So that it sells its product in two separable markets whose demand schedules are

𝑃1 = 360 − 𝑞1

𝑃2 = 280 − 0.4𝑞2
 Calculate the equilibrium position of the monopoly in each plant

b. A firm manufactures a medicinal product containing three ingredients X, Y and Z.

Each unit produced must contain at least 100g of X, 30g of Y and 75g of Z. The
product is made by mixing the inputs A and B which come in containers costing
respectively £3 and £6 each. These contain X, Y and Z in the following quantities: 1
container of A contains 50g of X, 10g of Y and 15g of Z 1 container of B contains 20g
of X, 10g of Y and 50g of Z. What mix of A and B will minimize the cost per unit of
the product subject to the above quality constraint.

c. A firm operates with the production function 𝑄 = 95𝐾 0.3 𝐿0.2 𝑅 0.25 and buys the three
inputs K, L and R at prices of k30, k16 and k12 respectively per unit. If it can sell its
output at a fixed price of k4 a unit, what is the maximum profit it can make?

d. A firm operates with the production function 𝑄 = 45𝐾 0.4𝐿0.3𝑅 0.3 and can buy input
K at 80 a unit, L at k35 and R at k50. What is the cheapest way it can produce an
output of 75,000 units.

4.
i. Given the following system of equations

X + 2Y + 4Z = 36
X + Y + Z = 20
−2Y − 7Z = −35
a. Express the system in matrix form and use the matrix inversion to find the X, Y and
Z
b. Find A−1
ii. Find the determinant of the following matrix

8 10 2 3
0 5 7 10
2 2 1 4
3 4 4 0
iii. Given the following matrix of output coefficient and vector of final demand
0 0.25 0 500
A = [0.1 0 0.4] d = 1000
0.3 0.15 0 750

a. Explain the meaning of the element 0 in the first row third column of the output
matrix A.
b. Obtain the gross output vector it will necessary to produce in order to meet the
final demand vector
c. If the production of one unit of the first good require 2 hours of labor time, one
unit of the second good requires 5 hours of labor time, and one unit of the good
require 1 unit of labor time, approximately how many hours of labor time are
needed to meet the vector of the final demand?